Better Schools, Stronger Economy: Saudi Arabia Eyes a Major Growth Dividend From Education

Improving Saudi Arabia’s education quality could add $125–156 billion to GDP within 20 years, making stronger learning outcomes a major driver of Vision 2030 and economic diversification. The gains will depend on better teaching, early childhood education and assessment, alongside private-sector growth that converts stronger skills into productive, high-value jobs.

Saudi Arabia has largely solved the challenge of getting children into school, but a more difficult economic test is emerging: whether those years of education are producing the skills needed for a diversified, high-productivity economy. A World Bank study involving researchers from the University of Arkansas, Saudi Arabia's Education and Training Evaluation Commission, the University of Warsaw, the World Bank and Qassim University estimates that sustained improvements in learning outcomes could eventually add hundreds of billions of dollars to the Saudi economy. Based on evidence from 97 countries between 2000 and 2019, the findings suggest that education quality should increasingly be treated as an economic growth and competitiveness issue, not simply a social-sector priority.

Better Schools Could Unlock Billions in Economic Value

Saudi students have made progress, but significant learning gaps remain. Grade 4 reading performance improved by 19 points between 2016 and 2021, while mathematics performance among 15-year-olds increased by 16 points between PISA 2018 and 2022.

However, PIRLS 2021 found that 29 percent of Saudi Grade 4 students were below the lowest international reading benchmark. TIMSS 2023 showed an even larger challenge among Grade 8 students: 54 percent were below the lowest mathematics benchmark and 43 percent were below the lowest science benchmark.

The economic implications are substantial. Using a conservative estimate linking learning improvements with economic growth, the study calculates that a 25-point increase in Harmonized Learning Outcomes could generate additional GDP equivalent to 3.75 percent after 20 years. A 50-point improvement could generate 7.5 percent, while a 100-point gain could deliver 15 percent.

If Saudi Arabia achieved an ambitious 180-point improvement, bringing performance closer to leading education systems, additional GDP could reach 27 percent after 20 years, equivalent to roughly $225 billion in constant 2021 prices.

Early Action Can Turn Learning Gains Into Faster Growth

Education reform will happen gradually, making the timing of improvements important. Under a scenario where learning outcomes improve by 45 points every five years, Saudi Arabia could generate additional GDP equivalent to 16.88 percent after 20 years.

A backloaded strategy, where progress starts slowly and accelerates later, produces an estimated 15 percent gain. A frontloaded approach, with larger improvements achieved earlier, increases the estimate to 18.75 percent.

These scenarios translate into approximately $125 billion to $156 billion in additional GDP after two decades. For policymakers, the message is important: delaying effective reforms also delays economic returns.

Rather than concentrating only on higher education spending, Saudi Arabia could focus on getting greater learning returns from existing resources. The report highlights structured teaching, stronger curricula, teacher training and coaching, tutoring, targeted instruction for struggling students and better assessment systems. Structured pedagogy combining lesson plans, textbooks, training and teacher coaching could improve learning by around 0.13 standard deviations within one academic year.

Start Early, Measure Better and Strengthen the Classroom

Early childhood education could deliver particularly important gains. Saudi pre-primary enrollment increased from around 20 percent in 2020 to nearly 40 percent in 2025, while the national ambition is at least 90 percent.

TIMSS 2023 evidence examined in the study shows that, after accounting for socioeconomic status and gender, up to one year of pre-primary education was associated with a 22-point improvement in Grade 4 mathematics, while two years were associated with a 30-point advantage.

For government, expanding access therefore needs to be accompanied by strong quality standards. Assessment is equally important. Saudi Arabia introduced annual census-based learning assessments in 2023 and comprehensive school evaluations in 2024 and 2025. Such systems can help policymakers identify weak schools, regions and student groups before learning gaps become harder and more expensive to address.

International development partners can support this transition through technical expertise in teacher development, early childhood education, learning assessments, education technology and evaluation of reforms. The priority should increasingly shift from measuring inputs such as spending and infrastructure towards demonstrating measurable improvements in student learning.

The Bigger Test Is Turning Better Skills Into Better Jobs

Education reform alone cannot guarantee the projected economic gains. Saudi Arabia's Human Capital Index is estimated at 0.58, while its utilization-adjusted measure falls to around 0.31, highlighting the challenge of translating available human capital into productive employment.

That makes education reform inseparable from Vision 2030's wider objectives. Improvements in schools need to occur alongside private-sector development, greater female labour-force participation and expansion of competitive non-oil industries capable of employing increasingly skilled workers.

For businesses, this transition creates opportunities in education technology, tutoring, teacher development, assessment services, digital learning and early childhood education. Employers could also benefit from stronger domestic skills and lower recruitment and training gaps. At the same time, companies need to communicate their future skill requirements and create employment pathways capable of absorbing better-qualified graduates.

The study's economic estimates are projections rather than guaranteed outcomes and depend on how successfully learning improvements translate into productivity and employment. Nevertheless, they give policymakers, development partners and investors a clear strategic signal: Saudi Arabia's next education dividend will depend less on how many students enter classrooms and more on how much they learn, how quickly learning improves and whether the economy can convert stronger skills into productive jobs.